Fix the Banks!

If there is one central theme to the ongoing financial crisis we face, it is an insolvent banking system. It is so bad that the accounting rules were changed (after the financial meltdown in 2008) to allow banks to value assets on their books at whatever they think they will fetch far into the future. So, the billions of dollars of underwater mortgage-backed securities and real estate sitting on the balance sheet is held at imaginary values to make many banks look solvent when, in fact, they are not. This is opposite of the way the IRS values assets. The price of something is based on what the asset is worth today. This is called mark to market accounting.

If any of the banks (especially the big banks) want to prove me wrong on this point, then they can simply value all their assets for what they can get for them today and the argument is over—fat chance! I never see this subject ever brought up when the president of a big bank is interviewed. I’ll bet you Jamie Dimon of JPMorgan would really squirm if he was asked what his bank would be worth if all the assets on the balance sheet were valued at today’s price.

In January of 2009, I wrote a piece called “Default Option.” I had the crazy idea that the big banks should be taken into receivership. Yes, shareholders and bond holders would have been wiped out. Tough—that’s investing. The only people you would have to protect are the depositors and, at the time, it would have cost $6 trillion. I said, “Letting those banks take the hit for their ill-advised, reckless investments based on greed will do many things. Here are just a few. Letting the reckless banks fail will limit taxpayer exposure, preserve our capital and our credit rating as a country. Bank failure will wash bad debt out of the system once and for all and protect the dollar from free fall. Finally, I think in the end it will be cheaper and more effective than what has and will be done in the future to “fix” the credit crisis.” (Click here to read the original Default Option post.)

Fast forward to today, and we see the dollar is falling, gold is spiking and the credit rating of the U.S. has been cut. My plan was downright miserly when you consider that the Fed (according to a recent GAO report) spent $16 trillion bailing out the world, with $5 trillion going to foreign banks alone. If you really want jobs in this country, you need capital formation not–debt formation. Capital invests in productive assets, and productive assets create real jobs! We still have a crippled banking system despite spending trillions of dollars, and there are still no jobs!

Money manager Barry Ritholtz of “The Big Picture” blog wrote last week, “The US banking sector is not healthy. There is a fundamental misunderstanding about the Wall Street bailouts amongst the public, and quite a few policy makers at Treasury and the Federal Reserve: Somehow, they “fixed” the banking system. All it took was few trillion dollars in liquidity and a few $100 billion dollars in recapitalization, and all is now fine (I suspect some people at the Fed know the Truth). In fact, they did nothing of the sort. The banking system was not saved; the massive injection of liquidity temporarily salvaged the day-to-day operations of banks, but they did not repair what ailed our financial institutions. Indeed, pouring billions into nearly identical management teams that mismanaged the risk, over-leveraged exposure, and drove banks off the cliff in the first place was an invitation for another crisis. And that crisis now appears to be arriving. And, it’s our own fault.” (Click here for the original top notch post from Ritholtz.)

This next crisis will be even worse. For one thing, institutions like Bank of America are being sued with allegations of “massive fraud” for selling toxic mortgage-backed securities. And it is not just B of A being sued. Investorguide.com said earlier this month, “These lawsuits are sweeping through the industry at an alarming rate, with no less than 90 active lawsuits over mortgage bond losses asking for approximately $197 billion – which could cripple some major financial players quickly and consolidate the industry in unpredictable ways.” (Click here for the complete Investorguide.com story.)

For another thing, the money dumped into the financial system is causing inflation to jump. Look at the price of food and energy. The next bailout will dump even more funny money into the system, and gold will be sent sailing past the moon on to Mars right along with inflation. Unemployed people with no money don’t need things to cost more, but they will.

Mega money managers Mark Mobius and Ray Dalio also say nothing is fixed. Both predict and say another financial crisis is on the way. Dalio, who manages around $100 billion, gives an end of 2012 or beginning 2013 time frame. In closing, two years ago I said, “Right now the “default option” is voluntary, but if we get this wrong and do not really fix this problem, then default may be forced on a lot more people than just the incompetent bankers.” It looks like we did get it wrong, but that doesn’t mean the system will not get fixed. It is just going to be a lot more painful than it needed to be.

About the Author

Greg Hunter

Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.

Comments

iknowbetter08/31/2011 •

Poor Greg. I don’t think you realize that this (ongoing) story will never be read by disbelievers. It seems you are preaching to the choir.

And it’s not just disbelievers. The average person is too busy salvaging a job, a family, or house, to even pay attention to the dirty details you so eloquently iterate.

Sadly, nobody wants to hear Default! shouted in a crowded theater of banking executives. (Without that warniing, how do you save yourself?} When IT hits the fan, the citizens will be screaming “why wasn’t I warned?”

Truth is, citizens shouldn’t be in this place created by banksters. And there is no warning system other than articles like this one.

Greg, How do you fix a system that is so corrupt, those who make the laws are beholding to the banks!! Thanks for saying what the main stream media refuses to tell us. We may be a little more sophisticated, but we are no better than any other third world country! Please continue to keep us informed!

James,
Good point my friend. We are headed for a crash, but a few years ago it could have been a controlled crash. I pitty the bankers when the general public figures out how screwed they are. It will be ugly. Peace.
greg

If only water would flow up hill, if only the economy would not react to the violent expansion of the money supply, if only a bank could just tell us how much money it had and it would be so, if only people would turn a blind eye to what is going on in front of their faces and just carry on like everything is fine………if only the government and their banking buddies had more power over us, if only our natural purpose in life was to bend to their every need and whim, if only the truth would just finish dying and get out of the way…….oh yes then everything would be just fine wouldn’t it.

Greg, The fed and the government will bail them out (banks) again and again regardless of who is controlling congress or the presidency. Their rationale will be we can’t have a 30’s type run on the banks, you can see the next bailout coming can’t you? Inflation be dammned for the working people. At all cost the central bank and the government no matter who is on top will take care of the big banks. For sure we will continue to see small or minor regional banks go into receivership (FDIC)and be taken over (given for pennies) to the big boys. One thing I have learned from watching our esteemed politicians, the fed, MSM, & wall street over the decades is that they will take care of the elite no matter what. So, in closing, just another bailout is about to happen; its a sure thing. It can and will be justified usuing our “professional” MSM opening the doors on the way to the vault and or the printing press.

It was the American dream done the American way. Glass-Steagall was repealed. Build the homes and people will come. Cities governments were teased with tax revenues, growth and expanded city services. Land developers, real estate professionals and bankers were in hog heaven! Home ownership is American as apple pie. Meantime, there was “the giant sucking sound” (to use Ross Perot’s colorful phrase) of jobs being leaving America. Free enterprise at its best — seeking cheap labor and new markets — exporting the American dream. Perhaps we should have known something was amiss when Enron collapsed. What ever happened to folks like Phil Gramm?
Give this a viewing for a journey down memory lane. Good comments to this.

On December 16, 2003, President George W. Bush signed into law the American Dream Downpayment Assistance Act,[1] which was aimed at helping approximately “40,000 families a year”[2] with their down payment and closing costs, and further strengthen America’s housing market.”

LD,
Whatever happened to Phil Gramm? He should hang his head in shame for the Gramm–Leach–Bliley Act of 1999. http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act It effectively killed Glass-Steagall act of 1933 that separated investment banks from commercial banks. In other words Non FDIC insured banks and insured FDIC banks. It allowed the TBTF banks to be what they are today–TBTF! I do not mean to give you a hard time the rest of your point is well made and well taken. Thank you for your comment and links!!!
Greg

As you already pointed out in your reply, it was the bad policy that changed the banking structures. Just like bad trade agreements destroyed business and caused job loss. As long as we have all those idiots in the government who only care about party war and make stupid policies, the whole country is going to suffer.

One thing I would like to clarify. It is the BIG Banks that are causing the problems. I was sad to see that many small banks were either closed or acquired by bigger banks. Instead of saving the small banks, the Fed bailed out the BIG Banks and helped them to acquire the smaller ones. Who said bigger is not better?

LD is correct that the Fed will bail out the Big Banks again and again. If any of the Big Banks fails (again), FDIC will not have the money to pay off the insurance covered for each account. It will be the Fed to rescue the BIG Banks.

Greg, Just get your money out of the federal reserve banking system. Yes, kill the bank, by not using them. Put it in a “dividend paying whole life insurance policy”. It is your own personal private bank. You can even get loans against your policy anytime you want one. It’s called the “Infinite Banking Concept”. It will change your life. If a small fraction of Americans do it, the banker crooks will be starved to death because no one uses them. It’s been around for over 150 years and is perfectly legal. Remember “whole Life”, not “term life”. I hope to see you write an article on this soon. Jerry

Jerry,
If the currency goes “poof” then no dollar instrument of bank will be safe. We are headed for a currency collapse, and everyone should hedge their bets with precious metals. They bare money and have a 5,000 year track record. You make a good point but this is historic and it will destroy the dollar as there are more than a quadrillion dollars in OTC derivatives that cannot be taken out of the system. (1,000 trillion) It will never be paid back! Please take steps to protect you and your family. Thank you for the comment.
Greg

The FASB rule changes hide fraudulent accounting by the banks as you have implied and have thrown another major financial assault on the U.S. Taxpayer, that being the FDIC guarantees on banks that fail with only a fraction of their stated value.
What has quietly (intentionally) faded to black is the MERS (mortgage electronic registration system) mess which has thrown who actually owns all those troubled housing mortgages into serious doubt. As Fannie and Freddie have been the main dump for these assets (?) it became easier to shield them from investigation. Every lawsuit initiated so far disputing home Deed titling has been won by the delinquent homeowner, a very scary and undertold story about our fraudulent banking system so closely tied with the bundlers in Wall Street.
This mess was the Ponzi scheme of all Ponzi schemes with the amount of capital involved so large there is probably no solution other than some feel good Perp walks of expendable banking soldiers — much like the Mob — you never will get the Capo.

Thank you Martin but never underestimate the anger of a mob. If I was a banker, I would be more worried about an angry citizen who has lost everything than law enforcement. You do make an excellent point though!
Greg

The TBTFs will never come clean because, even under the weak D/F legislation, they might (OMG!) have to be broken up. We must not be allowed to stop the incremental destruction of the US economy and the debt enslavement of its people even since the Creature From Jekyl Island reared its ugly head.

Bailing out Lehman generated the greatest citizen opposition that any congressmen could remember (90%), Yet saving the filthy rich was deemed the appropriate path. It should come as no surprise that default was off the table, even though, as you’ve correctly pointed out, was the most logical path.
They just needed more time to secure their private islands so they could make off with the booty from the greatest swindle in human history.
Keep up the good work Greg, all that evil needs to exist is for good people to do nothing.

While default and an honest house cleaning sounds righteous and good, unfortunately it is not realistic. The entire financial-cum-political edifice is now supported solely on confidence. As if people aren’t already nervous enough, imagine a whiff of a major bank (or 3), going into receivership? C’mon…

There would literally be chaos in the streets as people rushed to pull (what’s left) of their $savings out of banks, and the government implemented immediate bank ‘holidays’ and so forth. All that, within the societal framework that we have today. Remember, this is not the same society that we had in the 1930’s…

So yes Greg, we Are going to get it ‘wrong’, but I wouldn’t suffer it too much. After all, this ship has been taking on water since the early 1980’s, when the transformation began from a Savings & Production-based economy, to a Borrow & Spend, Debt-based, easy-credit economy.

The signs have been there all along the journey, but the ride proved too fun to slow down – or even stop to look at where we were headed. The best we can hope for is to save what we can, get involved in the local community, and weather this through to the other side.

Agent P,
We could have had a controlled crash. Yes it would have been bad but the credit rating of the U.S. would have been protected right along with the buying power of the dollar. Now, the country is going to have an uncontrolled crash and this will prove to be historic and life changing. The U.S. dollar and treasury complex will provide the world with the biggest default in history and it will be global! However, I cannot disagree with your all of your points. They are well made and well taken. Thank you for contributing your perspective here!!!
Greg

The year of jubilee is upon us, like it or not, it is an irrefutable fact. The debt will be canceled one way of the other, violently or peacefully, it will be done. I give the peaceful option little hope unless a massive awakening happens.

Ken,
Your words echo a brilliantly done documentary I saw not long ago on Netflix Streaming about how physically sick our world is and how our species is the first, that we are aware of, to destroy it’s survival KNOWINGLY. Not news, but extremely well done emotionally. We have deluded ourselves far beyond just the American Dream:

“The world is saying look you have a choice, you can either fix it or I can fix it, and if I fix it you are not going to like it because I’m going to throw everything away. … ” -Blind Spot

Greg,

Found your site awhile ago and not only love it but admire you for stepping out of the glitzy game to help educate our masses. People like you are critical and need to be the voices we listen to (ego boost worthy). Most people sadly think that truth will be delivered to them on a silver platter if its bought and paid for. You only find truth if you search like hell for it. Not that it’s news to you but I literally feel as though I don’t know another person currently in my life that is even on the same planet as me. ALL of my friends and family have their heads in the sand while they go bankrupt and lose their jobs and homes etc. The only criticism is I wish there were even MORE posts by you or those in your “former” field that are like-minded and de-monkey-fied themselves from puppeteering on MSM 🙂 (I check this site fairly often and silently say in my head “aww no post today” Although that may be because I checked out on cable tv and MSM a couple years back and translated news is harder to come by)!

I truly believe it will be more than just a currency loss that will come from all of this greed. ALL life is in jeopardy now due to just how greedy we humans interact with nature and each other. Rich AND Poor. It will be a short lived generation of mass specie extinction. Our true violent reawakening will be the after effects of a depression in this day and age. Corps like Monsanto have made their stamp much too deep. I think we will finally be reminded that we are social inter-dependent creatures who should succeed by working together as communities for survival vs. the notorious greedy selfish monsters we have become with no REAL rule of law. I am a believer in Darwin but this eats me up inside. Everyone’s out for themselves and it will just get more and more disturbing as this crisis comes to a head. All of our precious oceans, rivers, soil, and air have all been FUBAR’d with since oil got her first drill –> overpopulation, disgusting food that will make you more ill than healthy, pesticide pollution used for that yummy fluoride taste in our water, toxic mercury used to preserve mandatory “life saving” vaccines…. FARMERS THAT REFUSE TO EAT WHAT THEY SELL!

Ladies and gents, we have been wasting all our precious resources that can’t be replaced with money, or gold, or silver, or ANY precious metal (and if the ozone doesn’t hold up, why even think about the rest). I’m VERY curious – I have 500 pure coins and i’m fixin’ to just have a drink of water because it’s LA and we don’t have fresh water if the tap water company doesn’t function – who in the hell is gonna take my gold for his precious water? Or sell me a plot of FERTILE soil?? Or dig a well into the-oh wait sorry, no ground table water left anymore… what’s peak oil?? and CRAP! where are all the bees??

I’ve been following this info about gold and silver etc and understand the concept, but in the end, EVEN THOUGH its been sound for 5,000 years as mentioned here… we simply don’t have enough time when you think it through rationally. If we squandered away all our OTHER precious resources needed to make gold useful, how many of us will survive to make use of the shiny pretty metals? Only one possibility comes to mind: big oil releases all of the suppressed clean energy patents it has bought out or killed for if $$$ was refused. “Gashole” spells out this idea almost teasingly. But still, that would require the greedy to think of something other than themselves and owning the world. I hope they have fun on their sick planet when it’s only them in the end!

With each passing month we find ourselve’s redefing the definition of
“outrageous”. The attournies general have prostituted themselves to
concoct a scheme that will make unlawfull home repos and open eneded deal.
Our own (sold out attourney general) here in Minnesota “Lori Swanson”,
experienced an attack of conscience only 24 hours after “TARP” expired
at midnight on a Sunday, saying : the actions of the big bad bankers,
using fraudulent MERS documents, was outrageous, and had to be stopped !” she failed to mention that only hours before
the TARP compenstion system had just been shut down! “way to go Lori”
Countless homes are being forclosed and abandoned, we need to use our
imaginations here, and think like cockroaches; what would be the next
most important obligation that the banks would like to lose?
I’ll bet good money that secret legislation is being prepared to vanquish banks from have to pay property taxes on their newly repossessed properties.

Steve, if correct, that statistic is absolutely stunning. I shouldn’t doubt it, I suppose, but boy howdy, that is a stunner. All I can say is OMG. [However “more than” is better than “over”.:] Yeah, it’s clear that this country is run by a power elite whose goals are the polar opposite of what the people want and need. It’s shameful and shocking and sad — testimony to the pernicious corrosion of greed and corruption.

Much of the money sent to foreign banks was to ‘buy back’ the toxic debt that the big US banks foisted on them, so that they wouldn’t get sued for fraud (at least by RBS, Barclay’s stc) but what about US pension funds that bought these worthless mortgage securites? They will have to sue to get buybacks, likely NOT at par value.
Jim Willie CB at goldenjackass.com does a great job explaining this and much more, including why the Yen is appreciating (selling US treasuries for tsunami rebuilding, etc) and why gold continues to rise….as the above article explains, it’s because mark to market rules have been suspended, and most of the big banks are actually insolvent. Watch for the Chinese gold ETF (fully backed ounce for ounce sold) to start up this fall and then the real value of gold versus falling worthles fiat currencies will show, as COMEX and LME can’t sell enough puts to keep the price down any longer, and likely default. Got gold and silver in hand? KEEP it and sell your paper gold/silver now.

Greg, I couldn’t agree more, however this problem will never be fixed this way, there are way to many vested interests for this to happen, & the one’s with this vested interest, are the one’s in the drivers seat, ie: the big banks, big corparation’s, politician’s,& the military industrial complex. Unfortunately we are going to have to wait until this whole Ponzi scheme topples of it’s own weight, then perhaps we can begin to rebuild on a foundation of real value based money. Until then to quote a brilliant man, Mr. Darryl Robert Schoon, “buy silver, buy gold, have faith”.

Actually, if Ron Paul gets elected president I think there could be a realistic shot at liquidation. Dr. Paul has been preaching debt liquidation for years and support for his candicacy is growing.

I encourage your readers Greg to get involved in his campaign. This is a man who wants to bring back a gold-backed dollar, bring our troops home and stop spending trillions on un-ending, undeclared wars.

If you want to know more google “Who is Ron Paul” or check out the dailypaul.com

Once again, we are going to learn our lessons the hard way. It is commendable that people like you work diligently to alert the populace in time to consider options, and no less commendable that you keep at it right up to the point where there are no longer any choices and the pain, magnified in intensity and duration, is coming on. At that point, you still have a valuable role in publicizing the causes of the problems so that the perpetrators don’t succeed in misleading the great unwashed masses as to their culpability.

Another great article Mr. Hunter. Keep hammering away at the rock and eventually it will crack and crumble.

AS I have written to your blog many times before I want to again state again to your readers – even though it is no surprise to those who are aware of the facts: Politicians, Lawyers and Bankers have all learned to work together to enrich themselves at the expense of the innocent, but ignorant, little guy and the small business owner.

Until that reaity changes it will business as usual for the priviliged elite.

That was never the orignal intention in the creation of the Bank Act by our Founding Fathers in the United States, Canada or anywhere else throughout the Free World.

Your readers should “pull” publicly registered documents from Government Registry Offices of members of the privileged elite to see and understand for themselves the size and terms of these outrageous and unconscionable Personal, Business and Mortgage Loans loans these folks treat themselves to, to their colleagues and to their family members. The shock would produce instantaneous disgust and nausea to your readers.

It is ironic that it is these very same people who make the claim that they are all working very hard to solve today’s systemic banking crisis.

Ben Bernanke et. al. bailed out the banks based on debts whose values had been deflated because of the accounting rules?

This means, the trillions printed, to supposedly “save” the banks was based on an unreal number? It’s like disneyland.

So, if Bernanke decides to print again, he will continue to use those manipulated numbers? i.e. the unreal numbers “changed” by the accounting rules? Or are the banks just being allowed to borrow at interest rates of 0% hoping that they’ll make enough money to pay off the “real” debts?

Excellent written article, but I must add what Jim Sinclair has taught me and that is the 9.5 Trillion that has already been inserted into the system is irretrievable. The winners where already paid this money(and perhaps there are individual trillionares lurking around already). Lord help us what is comming down the hyperinflationary pike due to this unbelievable payout. All this is so elementary to why gold is one of the ways to insure oneself through this ongoing diaster. What is so sad to me is that the main newsmedia and the public itself is not even concerned with how so few extracted so much, but how we are fighting each other over the scraps that are left. Republican, Democrat whatever are all bought off by the financial industry and their actions are like hyped up professional wrestlers.

Armistead Garrett,
Mr. Sinclair is one of the few that warned of this massive problem early on. He is one of the very brightest and most ethical in the financial world. I would listen to anything he says and consider it the truth! I have the utmost respect and admiration for Mr. Sinclair!!! Thank you for your comment and analysis!
Greg

“Permit me to issue and control the money of a nation and I care not who makes the laws.” Mayer Amschel Rothschild

This should pretty much sum up why we are in the mess we are in. This world’s banking system is being taken hostage by debt by a banking cartel most have never heard of. There is no stopping this as these men who represent this cartel are controlled by a prince who is demanding this:
Dan 9:27 And he shall make a firm covenant with many for one week: and in the midst of the week he shall cause the sacrifice and the oblation to cease; and upon the wing of abominations shall come one that maketh desolate; and even unto the full end, and that determined, shall wrath be poured out upon the desolate.

This covenant for one week which is actually 7 years and will possibly be made this fall once the next crisis brings the world to its knees begging for a solution that will already be waiting so the crisis wasn’t wasted.

Greg, I very much enjoy your articles and I hold your insights in high regard. I have heard the 16 trillion “bailout” figure before, but how does this reconcile to the recent 1.2T figure? Have you found the amount of assets purchased vs loans made vs loans guaranteed vs whatever other items are in this figure, and how the balance outstanding in total has changed over time? if the Fed makes 100 $1 billion “over night” (ie one day pay and repaid) loans on 100 consecutive days to the same bank, is that 1 B or 100B in these figures?

by the way your IRS valuation comment is a bit off the mark. the IRS has rules on how TAXPAYERS must “value” assets in certain circumstances, and those values are vastly different depending on the circumstance. for instance, assets sold are generally valued at cost basis, while assets inherited are valued at market.

The $16 trillion number comes from the GAO and it was recently released from information the Fed was required to give up as part of the Fin Reg reform bill. Here’s more on the $16 trillion bailout from Senator Bernie Sanders’ website: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3 I do not know exactly how the funds were distributed but $16 trillion number gives folks the idea of how massive the money dump and bailout really was. Thank you for the IRS clarification and your comment.
Greg

thanks. i did take a quick look at the 200 odd page GAO analysis linked on Sen Sanders article. it is quite a slog so it is no surprise the public does not understand any of it, including me. It does seem that the maximum exposure, if you will, of this $16 trillion would be somewhat range bound by the total outstanding amount of loans at any one time (not considering the entanglements of derivatives, if any of those exist in this lot), and that appears to be in the $1 T range. That is scandalous enough, but we can also see that too much money was also made churning and managing this fiasco. well it certainly is ugly, but i would bet most people hearing “$16 trillion in bailouts” make the erroneous leap that the financial perpetrators (the “banksters” i have read them so named) have been essentially given this money, in the commonly understood meaning of “give”, ie, free to keep at no cost. I suspect the actual net cost, including making generous assumptions about reserves for worthless or significantly impaired assets that we will learn about in the years ahead, might be “only” in the low hundreds of billions! haha… only! I wonder if someone capable is taking on this project to see what it really is.

I do believe we would be better served if the Senator (or a journalist) would go to reasonable lengths to make sure misunderstandings of this magnitude were not encouraged expressly or implicitly.

Greg – the populace wonders how the politicians can be be so lacking in oversight to allow all this to happen, and not only just in the financial sector. if one looks about ‘stupid’ is the norm today in most everything done by washington. just look with a mag. glass and see how, why and who is getting screwed here. it’s coming from all directions out of DC. and i’ll say again, it is not only just in finance. how can one but ‘not wonder’ why obvious solutions never seem to ‘come forth’ to obvious problems. with all respect, i still marvel at those out there proposing the many wide eyed solutions to seemingly obvious problems and then walk away shaking their heads when answers and solutions go the ‘stupid way.’….this is all to dumb to be that dumb….as the saying goes, ‘their ain’t gonna be no fix, baby, CYA….!!’

Let us not forget that congress now has a gang of 12 who will send bills to the rest of congress where there will be no debate, no amendments nor filibusters. You won’t hear any thing from the MSM about this that exposes what power the gang of 12 now have, not a peep, why? You will find out here. http://www.news.goldseek.com/InternationalForecaster/1314545567.php. Both men see the hand writing on the wall, just as Greg has out lined today!
The Federal Reserve has been a complete failure from day one & our own leaders of the past & present are to blame as well as all Americans who never questioned the acts of our leaders. That is one fact we should never forget,never!

M Smith,
I thin Mr. Willie is completely on target and has been waaaaaay ahead of most financial experts by years! I hope everybody reads this but if not I will post part of the article tomorrow with a link to the rest! Thank you so much.
Greg

I agree wholeheartedly that bankers are thieves and liars; however, our “elected representatives” are complicit in this fiasco as well. As I recall, barney frank, christopher dodd, and their ilk forced banks to make loans to people who shouldn’t have received loans. The Fannie Mae/Freddie Mac crisis was the beginning of the end, and the aforementioned politicians likewise deserve their credit. I only hope when the bankers are held accountable, the rampantly corrupt politicians are as well.

Greg,
So nice of you to respond to many of the comments. Makes me think the web has not died an inglorious spammers/trollers death.

What about state banks? North Dakota? The end may be near but then again, we might just muddle through this in an extended 5+ year recovery (from today). State banks, dedicated to the people and not to the bottom line, might help no?

Anony,
Yes, a resounding yes! Banks should be treated like a public utilities and not a casino where the bankers feel they have the right to rig the game so they always win. The only problem with the way things have been mishandled is the U.S. will have to fix the currency as well. That’s what is truly frightening. Hello gold standard like it or not. Thank you for the comment.

I think the gist of their argument hinges around the fact that real-estate is at “fire-sale” prices and should rebound. This seems like denial that we are downward slope of the largest housing bubble in history. In ways, I thought it was an interesting read since I read a lot of articles from bloggers complaining about mark-to-fantasy accounting practices.

Patrice,
So the answer is to prop things up with phony accounting. Vibrant economies do not and cannot exist in an atmosphere of fraud. Their argument is flawed because it is the liar loans, no down payment deals and artificially low interest rates that drove prices up. It is not a fire sale but housing returning to true value and we have about 40% to go on the down side. It NEEDS to reset to where the actual value is and not be propped up. The banking system is going to collapse anyway and the powers propping up the system are making it worse–much worse!! Let the free market decide. We do not live in Russia or do we? Thank you for bringing up this point of view even though I totally disagree with it.

Is it too late to secede? You know, setup a new nation using the U.S. Constitution but with better rules. Rules like, banks can only ever be used for saving and loan? Corporations cannot be people. Elected officials cannot determine their own pay or benefits. Taxes are set at a fixed %. We’ll still use a fiat currency but never allow QE style inflation (a gold standard is too manipulable by the rich). Or does such a place already exist? Shall I start packing my wagon?

Will this country every get back to working in the way that the people actually want as opposed to what corporations and banks want? Or are we in a deja vu’ of the Roman collapse circa 450 CE? Greg, your inciteful language makes we begin to wonder. (No inciteful is not a word – but it should be).

I work with a few social workers who are leaving a government funded job for other government funded jobs. one is going to work for veterinary affairs and the other at a community health center. Theyll both be making about $60,000 dollars a year.

I didn’t realize social workers (especially those that work for governments made 60K a year) – however, both told me that their jobs were secure because:

1) No politician will dare cut funding for veterans &

2) When the economy tank, social workers benefit

The idea that the government will eventually cut many of these programs did not enter into their equation.

Hi Greg: Another good article. A few quotes come to mind: 1) “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford 2) “This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.” — Charles A. Lindbergh, Sr. , 1913

“From now on, depressions will be scientifically created.” — Congressman Charles A.
Lindbergh Sr. , 1913
3)”The Federal Reserve bank buys government bonds without one penny…” — Congressman Wright Patman, Congressional Record, Sept 30, 1941
4)”Some people think the Federal Reserve Banks are the United States government’s institutions.
They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers” — Congressional Record 12595-12603 — Louis T. McFadden, Chairman of the Committee on Banking and Currency (12 years) June 10, 1932
5) I do not like to think that any law can be passed that will make it possible to submerge the gold standard in a flood of irredeemable paper currency.” — Henry Cabot Lodge Sr., 1913
6) “Neither paper currency nor deposits have value as commodities, intrinsically, a ‘dollar’ bill is just a piece of paper. Deposits are merely book entries.” — Modern Money Mechanics Workbook,
Federal Reserve Bank of Chicago, 1975
7 “I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The
issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.” — Thomas Jefferson, U.S. President.
8)”History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it’s issuance.” — James Madison
AND, the granddaddy of them all: “Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits.” — SIR JOSIAH STAMP, (President of the Bank of England in the 1920’s, the second richest man in Britain)
All of the above quotes and many more can be found at:www.jesusissavior.com/Evilsingovernment/FederalReservescam/quotes

You can run to gold are run to the hills. It’s not the money system that I fear it’s the rule of law that we have lost. We are living in a lawless land and this rot is why DC can’t make a move one way are the other. To tell the truth it feels like the country is being blackmail. Other wise you wouldn’t think all the good people in DC would be acting so strange. My guess is 9/11 was some kind inside deal that got out of hand. It’s stinks to high heaven as most people are waking up to and this rot is what holding this country back. LAWLESS LAND an BLACKMAIL how could we have a fair banking system without the rule of law.

The human race is what needs fixing! And that ain’t happening anytime soon.

This financial mess is all indicative of the world we live in and what people/humans have become as a whole. We are nothing more then money hungry animals that will rape and pillage everything in our paths to get ahead no matter what the cost of admission is. The true parasites of planet earth. Hands Down! It’s sad, and unfortunately, it will never change without something short of aliens from outer space coming down and “enlightening” the human race that they are not the only ones that exist in the universe.

The system is rooted, totally. The only way it can be fixed (now) is for it to collapse, which it is.

And then we can start all over again – and prosper.

Today, those running the show are corrupt greedy bastards in the superlative – they have to be replaced by financial managers who see money/credit/debt as a catalyst for genuine wealth creation through the production of goods and services that people need and want.

We have to work for a living, not cheat, steal and gamble using other peoples cash as the greedy bastards do.

Sadly these days money has become the thing in itself, the greedy bastards have created a financial fantasy world that has no relevance at all in our real industrial world.

It’s no longer possible to take this game seriously, but one has to or suffer the consequences.

I cashed in my pension fund a couple of years back and bought gold and silver.

What else can one do (to store wealth) when the stock market is run by algos, manipulated by high frequency trading and quote stuffing; the futures markets are no more than rigged gambling dens, while food and energy costs are escalating owing to printing cash and the related speculative mis-allocation of same?

Yep we’re stuffed, well and truly – and it ain’t going to get better until the corrupt greedy bastards are run out of town.

In the mean time buy gold and silver – what else can one do?

First time at your site Mr Greg, I’ll bookmark it, always good to read someone who is paying attention.

Bravo! I too, as a choir member recognize the beauty in seeing the truth so eloquently rendered by Greg. Many thanks for that. But the real wealth lies in correctly anticipating the DETAILS of the upcoming crisis, and there has been precious little written on that topic. In the 2008 crisis, the dollar index DXY soared well into the 90’s as cash was desperately raised at the all powerful direction of the margin clerks– and silver tanked by something like 65% to the single digits at $8-$9 level. Gold suffered similarly, but I do not recall as vividly. Riddle me this, esteemed peers: we now face the “worse” perhaps even the final crisis. Does it start with another wacko pursuit of green confetti cash, or is it an IMMEDIATE moon launch on the precious metals and mining stocks? Please show your work, and I’d be very interested in all thoughtful responses!

That’s an excellent question. It was interesting during the silver crash of 08 the premium to purchase bullion at my local silver store was 50%+ Even though the spot price was about $9-10, you couldn’t buy it for less than $15-$18 (sometimes it wasn’t available at any price).

I think we’ll see a time soon when premiums will be close to 100% of the paper quoted price. The problem with trying to anticipate the precious metals prices is the extreme amount of manipulation by the paper shorts. So how do you get around this? BUY PHYSICAL! Every month set aside the cash to purchase some, that way you’re accumulating using an average cost. In 5 years I don’t you’ll care much if you purchased silver at $42 or at $15, you’ll just be happy you’re holding the physical stuff and some financial institutions counter-party risk piece of worthless paper.
As a side note, I found it interesting that Hugo Chavez has started asking for his country’s gold holdings to be returned to his country (he’s calling it back from London and Swizterland first I believe).
Also interesting that Gaddafi was proposing a north-African gold-backed dinar currency. Then come to find out that the “rebels” had formed a central bank that would be part of the IMF weeks before they took control of Tripoli. Those must be some sophisticated rebels!

Greg, News from the Western Front: People wait in line all night at job fair in California. Greg, the MSM got it right, there were literally alot of people not just 10 or so. Its ugly out here, people are on the street, whole families living in their cars, sleeping in the parks or where they can. Its getting worse. I stop and give them a dollar and talk to them, they are people who lost their job and benefits ran out, no family support, so that is where they ended up. Only a small percentage of them are drug addicts or slackers. Am I sounding like a liberal, no, just a fellow american who is seeing the American dream becoming a nightmare. From the Western Front.

In reality, price is not one number. It is probability distribution. something like electron cloud. Problem is that our accounting is stuck in Newtonian-world and finance has moved to quantum-world, if not beyond into imaginary worlds. So accounting (Balance sheets included) is INCAPABLE of showing correct picture much like a drawing on a piece of paper cant be 3D. Only thing is, now we are now able to see that paper is 2D and not reflecting 3D picture.

“people” with money, who should be in charge of finance and should be dictating accounting rules, are all cowed down as government has become more powerful then its people. so?

let us wait till over-doing it tips balance back in favor of slim government with less powers. but all that, in my view, is due after couple of years and not tomorrow.

This headline just posted on Drudge. It’s supposed to be one method the president is using to raise anger from the people against the congress. Why don’t we all send in petitions for his resignations instead. That would backfire his little scheme.

First, it finally occurred to me to analyze who the winners and losers are under weak dollar vs. strong dollar policies. Under a weak dollar policy, the winners are banks (who can borrow at low rates and lend out at higher rates or speculate), speculators and corporate borrowers/bond issuers, and the losers are savers (low interest rates), investors (artificially low real return on investment, skewed by low interest rates and inflation), people on a fixed income like retirees, and consumers (inflation). The wins come mostly from paper profits. By contrast, under a strong dollar policy, the winners are savers, investors, and consumers, and the wins amount to real wealth creation.

The first presidential candidate who advocates a strong dollar policy will get my vote. (That’s probably Ron Paul.) Forget tax policy and all the rest — those are secondary concerns. I’d really like to see a candidate form his campaign platform on that basis. Spell out the winners and losers clearly as I did. Help the people understand how they’re getting the shaft now, and why a strong dollar policy is the cure. Make it succint. Make it the main theme of the campaign. Such a candidate would win in a landslide. People are ready for a change, they just don’t know what kind. Spell it out. Make it simple.

The other comment I have is related to the concept of corporate personhood, the proposition that a corporation has rights just like people do. (Personally I think that notion is bunk, and if you research its history you’ll find that a twisted, accidental interpretation of the Fourteenth Amendment led us to where we are today). It occurred to me yesterday that, if corporations do indeed have the same rights as people, then one ought to run for President. So then I started thinking about whom I would nominate, and my short list was Halliburton, Goldman Sachs, Exxon Mobil, and… you guessed it… Bank of America. BoA for president 2012!!! Yeah!!!

I am from europe and we are in same boat as the states. The banksters/politicians/industry is together in one bed. With the
creation of central banking, fractional banking they were and are able to transfer the wealth from the masses to the few. That is why we have last 100 years so many wars they were all around the world financed by the banksters. If we don,t close the central banks and take away the money stolen by the mobsters/banksters hell will be paid by future generations in the west.

The slow slog into third world status can not be stopped by nay amount of money pumping. The USA’s industrial base has shifted to a cheaper workforce and the government helped them. The ability of the stretched economy to rebound is gone and we are just waiting for the the straw that will break the camels back.

Greg, I own many ounces of gold and silver, real estate in America and other countries, farm land, water and seeds. I own electric vehicles. I run my companies on solar and wind powered systems. I also have a dividend paying permanent insurance policy that makes me a lot of soon to worth less or worthless paper in various currencies. I realize what is going on because I am an sponge for the history of money yesterday, and today. My circle of global financial advisers are very intelligent bunch. I know what the Romans did, right and wrong. I know what the Bank of London did. I know what the Rothschild family has and is doing. I know they start the wars for their profit.I know the brilliance of Pennsylvania Scrip and the debt free monetary policy of Colonial America. I could go on. No need to give me a history lesson. I am a well studied man in the history of money and gold. Fractional reserve policy and fiat banking has been practiced for thousands of years and it included gold at various times. Nixon was the idiot to take the USA off the gold standard last time. Kennedy was assassinated because he wanted to print money. Johnson overturned that immediately following Kennedy’s assassination. The Federal Reserve system has been crushing the dollar since 1914. Jackson, Lincoln etc. killed the central bank. Thomas Jefferson warned us of the dangers of a central bank. Baron Rothschild told us that the person that controlled the money, controlled everything, not the government. The Rothschild family have set the standard for the Moneychangers evil system to fleece the worlds people for centuries. Most of the countries in the world today are using the Fractional reserve, print money like there is no tomorrow. When we go down, so will the rest of the planet. The currency of the future will be equally felt by everyone. The bankers also are manipulating the precious metal markets today. Again a vast percentage of my assets is in gold, silver, farm and income land, solar and wind powered properties. I will count on a total asset approach that is self sustaining. I realize that I can’t eat or drink gold, produce power from gold, drive gold, or live in a gold house. Ron Paul for President 2012! Restore America to it’s rightful place that our forefathers fought for, and won. Just my opinion Greg, thanks for the comments.

Since you have studied the historic dance of scrip vs. hard assets, perhaps you could share your thoughts or perhaps those of your financial advisors on what moves near term are expected with gold and silver, in the event of the upcoming and expected market crash / liquidity crisis. This crisis could repeat as early as the next month or so, or perhaps the Central Banks can hold off the inevitable until after the 2012 elections. As an example, a “rational” move by the markets — the one I would venture is anticipated by most of the readers of this blog– would be a strong bull run in both gold and silver, as the final phase of the commodity bull kicks in with investors scrambling to beat the onset of inflation, and the broader global public rushing in to avoid being left behind. However, either via bank manipulation or just the “irrational” side of the markets, sometimes cash becomes king for a time, as we see all commodity classes get killed and a rush to “safety” of cash and bonds continues. Although I personally believe a kill shot on silver/gold (say $20 silver, $1200 gold to just pick something reasonable) would be very short lived, it would be great to hold cash at the ready to take advantage of those fire-sale prices! Also, such a clearing of the market would definitely set off the final parabolic bull run on the metals that we all expect. Thank you for your attention.

Hey Greg, Yes sir! I got lots of fire-sticks, Ammo, a boat and fishing poles too. Keep up the good work. You in turn are doing better work telling the truth than 99.9% of the so called journalists out there, and are a true patriot. I know your USA Watchdog is reaching a lot of folks that would be caught off guard. They can’t say they were not warned any more.

Jerry, I have a question for you and your excellent team of financial advisors which from your description sound like they can handle. We know the other side of this storm is on the way, and that this time it will be worse, as in continued recession/depression forces coupled with highly inflationary or even hyperinflationary monetary policy by the central bankers. My question is, PRIOR to all the inflation, will the Rothschilds et. al. of present day throw the head fake, ie. cause a worldwide crash in assets similar to 2008, where gold and silver get crushed– driving the unwitting masses to sell in a panic– all the while the banking elite taking the other side of the trade, collecting the hard assets, THEN inflate? OR does the dollar go down for the count, right off the bat. My concern over THIS scenario, the one last worldwide margin call is the only thing keeping my last 33% in cash. Lend us a lifeline if you are able to shed light on the topic. Thank you.

Glenn, I believe that Baron Nathan Mayer Rothschild meant it when he said long ago, ” I care not what puppet is placed on the throne of England to rule the empire… The man that controls Britain’s money supply controls the British Empire, and I control the money supply”. Today the house of Rothschild and their families ancestors now also own and control the U.S. monetary system known as “The Federal Reserve Bank”. As Greg Hunter has pointed out so often, this Keynesian, Fiat, Fractional Reserve banking and lending system is made to keep the people in perpetual debt. Part of the scheme allows the FED to sell Fed Notes (dollars) to the Gov. and banks they own. The current law allows them to loan out out at least 10 times the amount of actual dollars on reserve! They make money on interest from loaning it out fictional money to us. Yes they make money on money they do not have. It is legalized counterfeiting. Hard to believe we put up with it. What could you do with your own printing press. They control much of the wealth in the world because of this centuries old practice. They can’t stop themselves. In my daily activities, I watch and listen closely to what these sneaky elitists are doing, and saying. My financial planning sources have the ability to watch from a much closer view, so yes they have been instrumental for my actions. So my conclusion. My main decisions have been based on what is most important to me. First and foremost, my personal and global family. Our health and our ability to be self sustaining, as to not be the slave to the elite banker crooks in any way. This means a homestead powered by wind, geothermal, and solar systems. Can be mini hydro if you have the source. Learn how to grow food, it’s actually fun. Get heirloom, organic seeds not GMO. If your soil is poor, amend it with what it needs to make it fertile. Get vehicles (Car, truck, scooter etc.) you can charge up at home with your free power. Stock up on basic supplies for a couple years?, T.P., grain, beans, dehydrated etc. Could be more, or less, (you get the point) depend on yourself, not someone else. Own guns and plenty of ammo as Greg suggested for hunting and defense. Speak up and defend the Constitution, Bill of Rights and your God given right to be free. Choose to be your own king, not a slave. I also have about 15% of my assets in gold and some silver. As Greg Hunter wisely suggests us all to have. Have only enough paper money as needed in the short term. It will be worthless. The elite like to go back and forth between basing currencies in and out of these precious metals and paper money. As Greg has again pointed out history proves it. The elite create “Boom and Bust” cycles. So yes, actively participate and watch your investments carefully for the cycles. The elite are sneaky and call the shots for their personal gain every time. They don’t care about us. Behind the curtain the elite a secretly buying precious metals again now, but when will they sell, if ever? I also have a “Dividend Paying Mutual Permanent Life Insurance Policy”. It is 15% of my portfolio. Unlike banks, people with these policies survived the great depression, as did the Insurance companies. They in fact prospered. Why? First, keep in mind that it is just like having your own private bank. As you pay your premiums, you can take out a loan for about 90-92% of your policy value, last time I checked. You always have access first to the money. The Insurance company will invest in the meantime unless you need it first. But here’s the reason why they never go broke. They only invest or lend out 90-92% of the total cash in reserve! As I said the banks lend out 10 times the amount of actual their cash reserve, thus the Keynesian fractional reserve banking and lending system never works. It is always in debt. Austrian economics works. So in conclusion I would keep a close eye on the wealthiest people and their investment activities, DAILY! Have the ability to count on yourself, not the socialist state handout lie. They love to control their poor slaves. Your asset allocation model is up to you? Depends on how much your worth. 1. 10-50%, Self sustaining homestead. 2. 15-40%, gold, silver. (Possible agricultural related, and energy sector investments.) 3. A dividend paying mutual permanent life insurance policy. 10-30%. If the sneaky elites are doing it, so am I. I don’t invest in war related investments. The elite have no problem making money off death and misery. I’m no crystal ball, but 33% in cash would not be my choice, I would put at least some of the cash in the Insurance policy instead of the bank, since you can get it any time you want. Besides it makes you more interest than in a bank, C.D., savings account. (The bank also considers it their money first when you put in their “care” too.) You can give yourself a loan instantly at any time. Then when you pay it back you earn the interest on doing business with yourself! Not the banker. Talk to someone like Northwestern or Guardian for instance. Learn the facts. I have no affiliation with any insurance company. Glenn, this is what I have chosen to do. By far the self sustaining ability has taken the pressure off my personal being. If my investment strategy is wrong, I have everything I need to survive without money. But precious metals, commodities and my Insurance policy investments do make me happy, mainly because I barely use a bank. I love to think that I am doing my small part to starve them, not them starve me and my family. Of course it is your choice, just my opinions and the actions I have taken. I want to thank Greg again for his great work to get the word out. End The Fed. Ron Paul 2012. Kind regards to you Glenn.

Poll: What Do You Think?

Greg’s Favorite Sites & Articles

Archives

Archives

About

Greg is the producer and creator of Greg Hunter’s USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin.

USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.